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About Me

Your blog editor is Frank Hurdle. I'm a native of Holly Springs, Mississippi; and a graduate of Ole Miss, B.A. and J.D. I buy and sell rural land and practice law.
My philosophy of life is simple: When society or the free market rewards an activity -- monetarily or through approbation -- then society will get more of that activity. Punish an activity -- through taxation or otherwise -- and you will get less of it. Unfortunately, the geniuses who run this fine country of ours haven't figured this out yet.

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Thursday, March 8, 2012

In Greece, the only safe bank is a mattress

In reviewing the goings-on in Greece, I can't help but wonder how a single bank in the country has more then fifteen cents in deposits.
In all likelihood Greece is still going to default on its debts. All of the machinations of recent months haven't been about helping the Greeks, who are unsalvageable, but rather to give the banks in France and Germany time to prepare for a total loss of their bond holdings.
The sooner Greece leaves the Euro, the better. Once back on the Drachma they can devalue it until it is impossible for citizens to import any more foreign goods. Then people will flock to Greece because it’s a cheap tourist destination and Greece will be on the slow road to recovery.
But just as Greece’s bondholders have been expected to take a 75 percent “haircut,” so will ordinary Greek bank depositors. Some morning when they least expect it, their Euro-denominated accounts will be converted to Drachmas at an inflated rate, at which point the Drachma will drop like a stone. Anyone foolish enough to keep money on deposit with a Greek bank will soon lose most of their savings.
Greeks who have sense enough to stuff their Euros in their mattresses – or in foreign accounts – will come out of the impending default like Daddy Warbucks. They’ll have plenty of hard currency in a nation where many of their neighbors’ savings have simply evaporated overnight.
Their foresight may not make them popular, but they'll keep eating.